1. Select ant one of the examples of fraud from the previous activity. Write down the example chosen. Classify the type of fraud as one of the following:
1.1. Corruption
1.2. Asset misappropriation
1.3. Fraudulent statements
1.4. Occupational fraud and abuse
1.5. Explain why you chose that category of fraud
Answers will vary according to the example chosen, but should match the categories as follows:
2. Do research online / library to identify the most likely piece of legislation that would govern this activity. 3. Discuss and brain storm what legal recourse maybe available to employers in cases of fraud.
4. Give an example of the above
5. What do you think the consequences of fraud would be for each of the following:
5.1. The organisation
52. The person committing the fraud
5.3. The customers of the organisation
5.4. The whole business sector
1. Example of fraud chosen: An employee creating false invoices and pocketing the payments.
Category of fraud: Asset misappropriation
Reason for choosing this category: This fraud involves the misuse or theft of an organization's assets, specifically through false invoicing and theft of payments.
2. The piece of legislation that would likely govern this activity: Depending on the jurisdiction, various laws could apply, such as the Theft Act, Fraud Act, or embezzlement laws.
3. Legal recourse available to employers in cases of fraud:
- Filing a formal complaint with law enforcement agencies
- Initiating civil lawsuits for recovery of lost funds or damages
- Terminating the employee's employment
- Assessing whether internal controls or monitoring systems need improvement
- Cooperating with law enforcement during investigations
4. Example: An employer who discovers an employee's fraudulent activities may choose to file a complaint with the police, terminate the employee, and initiate legal action to recover the stolen funds.
5. Consequences of fraud:
5.1. The organization:
- Financial loss due to stolen funds or assets
- Damage to its reputation
- Potential loss of customers or business partners
- Legal and investigative expenses
- Decrease in employee morale and trust
5.2. The person committing the fraud:
- Legal consequences, including criminal charges and possible imprisonment
- Financial penalties, fines, or restitution orders
- Permanent damage to their reputation and career prospects
- Potential difficulty in finding future employment
5.3. The customers of the organization:
- Potential financial loss or inconvenience if the fraud leads to price increases or service disruptions
- Loss of trust in the organization and reluctance to conduct future business
5.4. The whole business sector:
- Increased scrutiny from regulators and law enforcement
- Decreased trust from customers and investors
- Implementation of stricter regulations and controls